Google’s latest foray into philanthropic funding is Project 10^100, a contest ostensibly started to celebrate the search giant’s tenth birthday, with a $10 million funding “prize” awaiting five lucky entrants.

Here’s the outline of how it works: First, all the web’s crackpots, delusionals and entrepreneurs will submit ideas that, according to Google’s only qualification, will improve people’s lives. Out of all the entries, Google will choose 100. Thereafter, users will help identify 20, and finally an advisory panel will pick five that deserve to dip into the $10 million prize. However, Google will farm out the projects to other organizations (winners won’t personally “win” anything).

It’s interesting that Google has chosen yet another contest to plow its philanthropy efforts into. Google, you may recall, was also the sponsor of the Lunar X Prize, and also ran Android Developers Challenge for its mobile platform, children’s drawing competition Doodle 4 Google, the Google Programming Contest and Desktop Gadget Contest, and others.

One might get the impression that contests are working out for Google. Here’s one plus: A contest is easy to set up, but typically draws massive responses — and Google gets a good part of the recognition for any good ideas that come out of them.

In fact, if the number of contest-based fundings out there is any indication, the time seems ripe for a contest-based venture fund. It could even be called Contest Ventures (has a ring, no?). I’ll award a free VentureBeat t-shirt to the first person to start it.

On a more serious note, the project may end up giving money to startups that wouldn’t attract attention from traditional venture firms — even thought they might someday be lucrative. Perhaps a way of systematizing the ideas behind pulling that off could even be be submitted to Google.

The deadline is October 20th, 2008. The winners will be picked next February.